Most people get confuse with a crypto coin with a token, but the fact is that token and coin are similar on a basic level. They both process payments and show value. Also, you can change tokens for coins and vice versa. The significant difference between these two is utility. Some markets will accept coins instead of tokens, and in some places, tokens are helpful in place of coins. It is pretty similar to comparing traders and investors – not all investors trade, but all traders invest. But most users of cryptocurrency generally have both tokens and coins.
What is a Crypto Coin?
Some specific features differentiate crypto coins from tokens, and they are the same as real-world money. These below-mentioned features define a coin –
- Acts as real money: Bitcoin was launched exclusively to replace conventional money. The absurd appeal of anonymity and transparency inspired the foundation of other coins, including Litecoin, NEO, and ETH. Using crypto coins, you can buy services and products from several brands, like Tesla, Microsoft, and Amazon.
- Works on its blockchain: A blockchain records all operations that entail its local crypto coin. Every transaction is encrypt and is available by any associate of the network.
- Can be mined: there are two methods to earn crypto coins. One is via conventional mining on the POW (Proof-of-Work) system. Bitcoin hunters use this method for increasing their incomes. Proof of Stake is another method, which is a more contemporary method to earn coins. It’s easier to do and lighter on energy consumption.
What is a Token?
Tokens don’t possess blockchain. Instead, they run on other cryptocurrency’s blockchains, for example, Ethereum. If all the transactions of crypto coins manage by blockchain, then tokens depend on smart contracts. They are a series of codes that allow payments or trades among users. Each blockchain utilizes its smart contract.
